'Medicare+Choice' after 5 Years

By Hayes, Robert M. | Aging Today, March/April 2003 | Go to article overview
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'Medicare+Choice' after 5 Years


Hayes, Robert M., Aging Today


As the battle over the future of Medicare heats up in Congress, meaningful debate is floundering in the confusion over what elementary terms mean. Not since Alice was lost in Wonderland has the English language been so unhelpful a tool to understanding.

Two terms, used and reused in the Medicare debate, stick out: "choice" and "prescription-drug benefit." The meaning of each term is critical to the health policy decisions being made in Washington-where message so often reigns over meaning.

Start with the word choice. Everyone wants choices in life. Marketers of everything from selling soap to legislation know the offer of choices usually pleases audiences. That's why Congress, in 1997, dubbed its experiment to increase enrollment in Medicare HMOs "Medicare+Choice." Until then, nearly all older or disabled Americans on Medicare went to doctors and hospitals of their, yes, choice, under the original fee-for-service Medicare program.

A FAILED EXPERIMENT

In designing Medicare+Choice, Congress wanted to test the viability of diverting public money to for-profit insurance companies. The point of the experiment was simple: Congress hoped that private insurance companies in the form of managed care organizations could package Medicare benefits in different ways, offering an attractive selection of health plans to older and disabled Americans. Consumers could enroll in a Medicare HMO, agree to limit their access to a network of healthcare providers, and receive at least some benefits beyond those offered by original Medicare.

Experts now agree that this Medicare HMO experiment has failed. According to an August 2000 U.S. General Accounting Office (GAO) report ("Medicare+ Choice: Payments Exceed Cost of Fee-for-Service Benefits, Adding Billions to Spending") people who enroll in Medicare HMOs actually cost the government 13.2% more than if they were enrolled in the original Medicare program. This amounted to $512 billion in 1998, GAO reported. The highest percentage of people with Medicare who chose HMOs over fee-for-service Medicare was 16% in 1999, down to 13% by 2002, and dropping quickly.

In addition, the for-profit insurance companies say that Medicare funding provides insufficient profits for them to stay in the Medicare business, and many have abandoned their patients. Since 1997, plans have dropped their Medicare HMOs-and 2.4 million beneficiaries. The companies that have stayed have cut benefits and increased premiums, so the Medicare+Choice program has become a much less attractive choice for most people with Medicare. The Bush Administration, though, remains committed to turning Medicare over to for-profit insurance companies, and the White House continues to promote the privatization of Medicare. The Administration's tactic now is to bolster payments to the for-profit insurers.

PLAN CHOICE 'UNIMPORTANT'

Recently, the Medicare Rights Center, a consumer organization based in New York City, surveyed Medicare beneficiaries on what choices are actually important to them: choice of doctors or choice of health plans. Unsurprisingly, more than 90% of respondents ranked a choice of doctors as very important to them. Half that number (45%) ranked a choice of health insurance plans as very important. Even more telling, one-third of those surveyed (34%) ranked a choice of health insurance plans as unimportant, whereas virtually no one ranked a choice of physicians as unimportant. Clearly, when people with Medicare talk about valuing choices, they mean being able to choose their doctors and hospitals.

So the anomaly: The Bush Administration's drive to privatize Medicare means pushing people into Medicare HMOs that restrict the choices consumers care about most-seeing the doctors they want, where they want, when they need to see them. As the majority of people in the United States now know, once someone is in an HMO-Medicare or otherwise-the person can see only doctors who have been recruited into that particular HMO's provider network.

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